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  1. India must ensure the US addresses its IT companies’ concerns fast

India must ensure the US addresses its IT companies’ concerns fast

Visa fee hike issue and conclusion of the Totalisation Agreement are an integral part of the improvement in the Indo-US economic ties, and the American administration must address the concerns of the Indian IT companies.

By: | Updated: April 16, 2016 3:33 PM
US doubles fees for H1B, L1 visas While the visa fee hike is largely targeted at the Indian IT companies, the delay in the conclusion of a Totalisation Agreement that would benefit Indians working in America is also something that needs to be speeded up. (AP)

santosh-tiwari-s The joint statement issued by finance Minister Arun Jaitley and US Treasury Secretary Jacob J Lew after the Sixth Annual US-India Economic and Financial Partnership (EFP) meeting in Washington read: “At this meeting, the last for the Obama Administration, we took stock of the impressive efforts that have been undertaken by both sides to deepen mutual understanding, and to improve cooperation across a wide range of bilateral and multilateral issues. We reiterated that the US-India partnership will be one of the defining relationships of the 21st century”.

But, the American administration needs to understand that addressing the growing concerns of the Indian IT industry in the US has to be an integral part of this exercise.

Sadly, that is missing at present.

FM Jaitley, who is on an official tour to Washington DC to attend the Spring Meetings of the International Monetary Fund (IMF) and the World Bank and other associated meetings, did well by re-iterating India’s concern over the ‘discriminatory’ hike in visa fee by the US affecting Indian IT professionals, in his bilateral meeting earlier with US Trade Representative Ambassador Michael Froman.

While the visa fee hike is largely targeted at the Indian IT companies, the delay in the conclusion of a Totalisation Agreement that would benefit Indians working in America is also something that needs to be speeded up — FM Jaitley pressing for this too at the meeting with the USTR may help in expediting the whole exercise.

If Indian professionals have contributed over $25 billion to the US Social Security in the last decade without getting any benefit out of it, the situation urgently needs to be corrected, especially when the US has already entered into Totalisation Agreements with several countries to avoid double taxation of income with respect to social security taxes.

In case of visa fees, the US went ahead and hiked it despite prime minister Narendra Modi taking up the issue with US president Barack Obama — the US Congress decided to double the fees on H-1B and L-1 visas used by Indian IT professionals – a move which is expected to cost the industry over $400 mn per annum as against current around $100 mn.

While the utilization of the amount for the healthcare needs of the 9/11 victims as well as for a biometric tracking system over a 10-year period can’t be questioned, the larger question is whether the US companies in India will pay a similar charge for India’s social sector schemes.

Though it would be unrealistic to expect any remedy for the Indian IT industry till the US presidential elections are over, the Indian government’s continued pressure on the US on bilateral platforms is the right way to go.

The resolution of bilateral tax disputes between the US and India over transfer pricing additions to the income of the US MNCs in India has opened the possibilities of co-operation between the two countries to address the industry’s concerns.

The two sides have now started accepting bilateral Advance Pricing Agreement applications by companies in both jurisdictions in an effort to enhance cross-border business processes and strengthen commercial ties.

This has to be replicated in other areas, and especially in areas like visa fees and Totalisation agreement that impact Indian companies working in the US.

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Tags: US Visa

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